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Israel and its High Tech Revol

Israel and its High Tech Revolution

6/25/2012

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Israel and its High Tech Revolution

By Eric Schmidt

After a long trip through the Asian trouble spots, Israel felt very peaceful, and very much like Silicon Valley. I won't comment on the history, conflict or opposing views in the region which are well understood, or at least well covered if poorly understood. To see the tiny Old City of Jerusalem, crucially important to three world religions, is to understand why people have fought over centuries for this land (1).

Israel has few natural resources and has about half of its GDP tied up in export oriented businesses. The country is simply too small and with little opportunity to cooperate in traditional business with its neighbors, Israel has become a high tech hub. Google has a large engineering and sales operation in Israel, whose achievements are definitely world-class.

In our meetings four things became clear about Israel as a high tech, innovation engine:

a) The country has a long commitment to universities and science. The Prime Minister talked about the number of Nobel Prize winners, and his commitment to education, in much detail. Israel is an example of a country that succeeds because they emphasize science and engineering, not unlike South Korea but in a very different context.

b) The universal military service is integral to this process. Students (male and female) graduate two or three years later than they do in the United States and in most of Europe, and are simply more focused, better trained and more organized as a result. The teams are often led by someone in his early thirties and the teams are often people who worked together intensely during their military service. The core areas of Computer Science now revolve around data analytics, big data, artificial intelligence, and large networks of information. These are the same areas developed in the intelligence parts of the military, leading to teams already expert in these areas before they form the companies. Surely the new Israeli push in cyberintelligence will generate many new network security startups, for example.

c) Israel technology benefits greatly from the Internet. The traditional route to success is a technology group in Israel and and sales and marketing group in the Bay Area or New York. The Internet makes this much much more likely to succeed as geography fades away. There are a number of "under the radar" Israeli firms serving customers in Turkey, China, and other Asian countries where they would never have been able to operate before.

d) The security situation may actually help as some told us that there is a "live for today" attitude, taking more risks in business than other countries would. Another possibility is simply the age of the country: with perhaps forty years of socialism followed by more recent twenty years of capitalism, there are simply too few incumbencies to oppose innovation. For more on this, read the "Startup Nation" book.

We should expect much more investment in high technology in Israel, and many more startups as the next generation of the Internet unfolds. Many countries leaders want to replicate the phenomenal success of Silicon Valley. Israel is one example of what it takes, emphasizing technology and science education, a governmental role in supporting research and development (especially in the Israel's case through the military), and a culture that encourages risk taking and allows for rapid failure. For a small country, Israel will have an oversized impact on the evolution of the next stage of the technology we all use.

(1) for a history of Jerusalem, just out is "Jerusalem, the biography," by Simon Sebag Montefiore.